BOL advises caution over depositing money in microfinance institutions
BOL advises caution over depositing money in microfinance institutions
The Bank of the Lao PDR has warned the public to carefully consider the wisdom of depositing money with microfinance institutions after finding that a large numer of companies are operating such a business unlawfully.
The bank has authorised 143 microfinance institutions to operate in Laos, of which 15 are deposit taking entities, 41 are non-deposit taking bodies, 22 are leasing companies, 26 are pawnshops, five are money transfer companies, 32 are savings credit unions and two are financial institutions.
The names of these institutions can be seen in the bank's announcement in daily newspapers or obtained by contacting the bank directly.
The announcement by the bank will tell people which microfinance institutions are registered with the bank and operating legally in line with the bank's regulations and government policy.
However, some companies are operating this kind of business but have not registered with the bank.
These companies may try to take advantage of people and customers may not benefit in any way.
Through cooperation with the police and the industry and commerce sector, the bank has banned some companies from carrying out this line of business as they have not complied with the bank's regulations. But the bank says it cannot reveal the names of these companies.
Bank officials are certain there are more companies running this kind of business unlawfully.
To address the problem, the bank requires cooperation from various sectors as well as the public.
The bank will try to stop the operations of companies that have not registered with the bank as well as microfinance institutions that do not follow the bank's regulations.
If these companies wish to operate like a microfinance institution by lending money they must register with the bank before they begin operations.
Microfinance institutions are those financial institutions that undertake microfinance transactions as outlined in the Decree on Microfinance Institutions issued by the Prime Minister, comprising deposit-taking and non-deposit-taking microfinance institutions and microfinance projects.
The decree defines the principles, regulations and measures for the establishment, operations and supervision of microfinance institutions in Laos to ensure security and stability.
It also sets out conditions to enable the multi-ethnic people to have access to financial services, contribute to poverty reduction, and develop the economy and society as a whole.
